Institutional Selling of XERO stock drops the price to a new 16 month low NZD $15.00 / US$11.90 - @ Market Open.

 Duncan Bridgeman for National Business Review writes: Shares in cloud-based accounting software firm Xero [NZX:XRO] have extended their recent decline – opening today at $15 before recovering some ground during the morning.

Xero’s share price has dropped more than 25% in the past month as investors question the company’s pace of growth in the US, where it is competing against incumbent Intuit.

This morning’s initial decline was based on some large trades indicating institutional selling before the market opened, says James Smalley, a director at Hamilton Hindin Greene.

But by midday Xero shares had bounced off that low to trade at $15.60, down 2.8% on yesterday’s close.

Of the 380,000 shares traded this morning, about 240,000 (63%) were institutional crosses before the market opened, Mr Smalley noted.

“It does tend to give one the indication that the majority of the selling is coming from the institutional side of things.

“And, as everyone knows, those shares came out of escrow from the capital raising over a year ago at $18.50.”

Xero has also been re-rated by analysts after its operating update a fortnight ago.

Several analysts downgraded their 12-month price targets, citing what they described as disappointing US figures.

Xero said it had added 4000 US customers since March for a total of 22,000. Analysts had wanted to see faster progress and there are now concerns about the company’s cash burn, which could lead to another capital raise.

At the height of its run-up, in March, Xero was worth more than $5 billion, making it the second most valuable company on the NZX behind Fletcher Building.

Today, Xero's market cap is $2 billion.

Xero chief executive Rod Dury says the company is still in the early days of its push into the key US market.

With $171 million in the bank, Xero has all the cash it needs for a sustained fight against North American incumbent Intuit, Mr Drury says.

The move to the cloud has provided a strategic opportunity to break Intuit's grip on the small business market and to woo the majority of small business customers who have never used any accounting software.

Xero wants a million customers worldwide and is targeting growth in the US market where so far it has some 22,000 of its total 371,000 customers.

Why Taxes And Trading Costs Kill Investment Returns

Katina Stefanova  for Forbes writes: Underperformance, high fees and tight regulations are creating an environment ripe for disruption. I am constantly on the lookout for innovative technologies and business models that address the inherent problems of asset management.  I recently had a conversation with a former colleague from Bridgewater Associates, Maneesh Shanbhag who founded Greenline Partners, a progressive asset management firm aiming to help investors keep a higher percentage of their returns by managing not only for performance, but also for tax and operational efficiency. A self-described engineer with a passion for efficiency and elegant simplicity, Maneesh defies the stereotype of a typical hedge fund manager.  Maneesh left a promising career at Bridgewater Associates where he advised institutional investors on portfolio allocation to be an asset management entrepreneur.  

Maneesh shares that he did not get into this business to get rich quickly but to create a back to basics investment model that generates value for his clients at a lower cost. He and his partners at Greenline currently manage $100 million of assets under management (AUM) for private investors and foundations and have consistently outperformed their peers on a post-tax bases.

Katina Stefanova: The two most overused terms in the investment management industry are probably diversification and long-term investing. Some investors think of diversification as holding lots of different funds. But more often than not, these funds tend to have similar exposures (e.g. large cap and small cap are still all equities) or worse hold many identical positions, and hence are not diversifying to each other at all. Similarly, the way investment managers urge their clients to invest long-term is by subjecting them to the huge swings of markets and begging them not to sell after losses. The latter approach is disastrous to investors. The result is often unsatisfied clients who end up selling their investments at the worst possible time (after large losses) and frustrated advisors and portfolio managers.  In this scenario, everybody loses. Diversification and thinking long-term are the most important concepts in investing but investment managers can do a lot more with properly applying these concepts and just as importantly educating their clients about what they really mean. What is Greenline’s approach to addressing these issues? [snip].  The article continues @ Forbes, click here to continue reading...

Brace for the tax-break smackdown

Shelly Schwartz for CNBC writes: There may be fewer changes to the federal tax code this year than in 2013, but the handful that exist could still impact what you owe. Some, like the new health insurance tax credit, could put more jingle in your pocket, while the expiration of more than four dozen temporary tax breaks that Congress has yet to renew might instead leave students, teachers, retirees and homeowners out in the cold.

First and foremost, said Jackie Perlman, principal tax researcher for The Tax Institute at H&R Block, all taxpayers this year will see a new check box on their 1040 federal tax return, where they'll be required to disclose whether they have had qualified health insurance all year, per the Affordable Care Act mandate.

"That is by far the biggest change this year, because this is the year when the individual mandate goes into effect," said Perlman. "If you purchased insurance through the health-care exchanges, or marketplace, you're going to get a brand-new form in the mail called a 1095A. Keep it in a safe place for filing your return."

If you or your dependents did not obtain minimal essential coverage, you will pay a penalty equal to 1 percent of your yearly household income, or a maximum of $95 per person, on your 2014 federal income tax return, due April 2015. That penalty increases to 2 percent of household income, or $325 per person, in 2015; and 2.5 percent of income, or $695 per person, in 2016.  [snip].  The article continues @ CNBC, click here to continue reading.

Bob Scott's Insights probes, "MINTIFYING INTUIT"?

Bob Scott for Bob Scott's Insights writes: "Intuit executives say a platform linking small biz applications is coming. It seems likely something besides simply connecting code is involved—what is the financial model? Intuit's Mint operations suggest a solution. Intuit CEO Brad Smith has said his company would learn from Mint, which recommends products and services to users and also aggregates users' financial data. Services are free, but Mint notes "Sometimes we get paid a small fee when you switch to a new bank or company, which helps keep our basic service free."

Bob Scott's Insights is an advisory service centered on Insight & Analysis for the Reseller Community.

To read more subscribe to "Bob Scott's Insights" by clicking here.

MYOB outlines plan for online accounting practice solutions

New Zealand’s leading accounting software provider MYOB today shared its vision for how it will fundamentally transform the relationship between accountants and their clients, and announced the first milestone in its journey to take accounting practice solutions online. With a market share in revenue of over 60% - 70%, this announcement by MYOB is a major step forward for accountants in New Zealand and Australia.

In the coming months MYOB will deliver a series of product innovations that move the first stages of its flagship practice solutions Accountants Office and Accountants Enterprise online. Each innovative release is designed to deliver greater efficiency for accountants and their clients and make their business life even easier.

CEO Tim Reed says, "At MYOB we believe the greatest opportunity for both Accountants in practice and SMEs is for us to enable practice efficiencies that enhance collaboration between accountants and their clients. It is critical that we empower them to make use of mobile technology, and help them to leverage business insights through a common ledger. The real value of online practice solutions goes beyond the ability to complete tax compliance via the browser."

"We are entering a period of major transformation with MYOB’s practice solutions. Our announcement today is a key milestone in an exciting journey for MYOB and our clients - one that will benefit them in making the relationship with their clients as easy and seamless as possible," Mr Reed says.

Accountants Office and Accountants Enterprise have been the benchmark for accountants working in public practice for over 25 years. Over that time MYOB has built up a loyal client base of accountants across New Zealand and Australia, Mr Reed says.

MYOB Connect and MYOB Ledger are the first two online product innovations that will extend Accountants Office and Accountants Enterprise practice suites into the cloud.

MYOB Connect is a new online collaboration tool for accountants and their clients. It features a client portal that enables accountants to transfer documents securely with their clients. MYOB Connect is designed to be easily accessible on a smartphone, so that an accountant’s clients can access important documents from wherever they are.

"In just three clicks the accountant can publish a document electronically, notify the client and request a signature, then receive their electronic signature approval and file the document securely," says Mr Reed.

MYOB Connect is free for existing users of MYOB’s practice solutions. The general release is scheduled for early next year, however some clients will be trialling MYOB Connect from November.

MYOB Ledger will form part of the new online Accountants Office and Accountants Enterprise suites. It has been developed specifically with the accountant in mind and features include rapid data entry, and profit and loss distribution. As the small business grows, the client’s MYOB Ledger can be easily upgraded to MYOB Essentials Cashbook or Essentials Accounting, MYOB’s entry-level SME solution. MYOB Ledger will be available for general release in early 2015.

Mr Reed says these innovations to the Accountants Office and Accountants Enterprise suites are the latest in a series of new cloud solutions that have been released by MYOB this year.

"In 2014 we extended our Common Ledger vision to include MYOB Essentials so accountants can now access even more of their client’s data files directly from their practice solution."

In addition, there has been a rapid uptake of MYOB’s cloud accounting solutions for SMEs - MYOB Essentials and MYOB AccountRight. The company recently passed a record client milestone of 100,000 online subscribers and over 70% of new clients are now opting for cloud accounting solutions.

"Cloud accounting is no longer the future, the cloud is now," Mr Reed says.

The innovations announced by MYOB today have a major impact on improving the small business and accounting sectors in New Zealand and Australia. MYOB serves over 1.2 million business and 40,000 accountants and other partners, and has invested in excess of $100 million in research and development to help make their business life easier every day.

For MYOB product information, research results, business tips, discussions, client service and more visit the MYOB website, or its blog, LinkedIn, Twitter, Facebook, Instagram and YouTube sites.

XERO hits a 16-Month Low / dropping 5.9 percent to NZD $16.05 / USD $12.74 its lowest since August last year.

Suze Metherell for NBR.com writes: New Zealand shares rebounded from last week's drop, led by SkyCity Entertainment Group and Meridian Energy, as investors hunted reliable income in a volatile market. Xero extended its decline, dropping to a 16 month low.

Xero [NZX:XRO], the cloud-based accounting firm, was the worst performer on the benchmark index, dropping 5.9 percent to NZD $16.05 / $USD $12.74, its lowest since August last year. The stock has dropped 25 percent in the past month, as investors question the Wellington-based company's pace of growth in the US, where it is competing against incumbent Intuit. Xero wants a million customers worldwide, and is targeting growth in the US market where so  far it has some 22,000 of its total 371,000 customers.

"They haven't been hitting their stride in the US and a lot of peoples' view of its value is based on it beating Intuit," Lindsay said. Despite the stock's fall, it would still look expensive to many brokers, he said.